The end of the fiscal year is approaching and if you haven’t given much thought to tax planning, Certified Financial Planner, Matt Anderson from TCG Advisors joined Stephanie Gilbert to offer some reasons why folks should prioritize tax planning.

AS A CFP, WHAT DO YOU THINK ABOUT WHERE TAX PLANNING SHOULD FALL ON YOUR FINANCIAL PRIORITY LIST?

Whether we  know it or not, all of us have a financial plan, and all of us pay taxes right? Whether your plan is no plan at all, or highly thought out, we all spend, save and gift our money in some way, and taxes always interfere haha. 

HOW DO TAXES INTERFERE WITH OUR FINANCIAL PLAN? 

Let me give you a typical scenario of most people I encounter, who are no different than you and I. We work all year, we save, we spend, we invest etc. We do a lot of things with our money. At the end of the year, we look back, we gather up our receipts, and we drop them off to our tax person or sit down at a computer to type numbers into a screen to tell us what we owe or what we get back, usually with a big surprise. The way Americans pay their taxes is very retroactive in nature, not proactive as we should be. 

PROACTIVE VERSUS REACTIVE? I LIKE THAT, CAN YOUEXPLAIN IN MORE DETAIL?

Almost all of us have heard the words “You could have done this, you should have done that ”from our tax advisors. We accept year in and year out that our taxes are what they are without planning ahead. A tax return should be nothing more than the end result of a year’s worth of proper planning. Think of a successful business, any business, do you think these businesses operate blindly and wait until the end of the year to see what happened? Of course not! Successful businesses plan on a quarterly basis what their tax liability is, how to reduce that tax and how to maximize credits in order to increase their revenue, yet personally, in our own financial lives, we do not take this same consideration. 

SHOULD WE BE RUNNING OUR PERSONAL FINANCES MORE LIKE A BUSINESS?

Precisely! Successful companies have employees of all kinds who perform a job function that serves the greatest good of the company right? Everyone working together to make sure all of the puzzle pieces fit together to create a profitable result. Yet in our personal financial lives, we may have tax person over here (or do it ourselves), we then have a financial advisor of some kind over there (or do it ourselves), we then may have an attorney, a business consultant, an insurance person etc. all spread out working independent of each other without any interaction whatsoever. And we as individuals assume that they are all working toward the same goal without knowing who each other are. 

WHEN IT COMES TO FINANCIAL DECISIONS, WHY IS TAX PLANNING SO IMPORTANT?

First off, your financial professional should be aware of your particular tax situation, and vice versa your CPA or other tax professional should have a good handle on your finances. If you are a business owner, what credits and deductions are you missing out on by not properly structuring your personal investments appropriately? Is your financial advisor investing for someone in your tax bracket? Are you maximizing your retirement savings deductions and credits effectively? Are you subject to Net Investment Income tax and don’t know it because your tax advisor hasn’t mentioned it or your financial planner isn’t taking it into consideration? Should you have investments that are geared toward tax free income or high yield taxable based on your specific tax return? These are just a few items that I see everyday where people make costly mistakes simply because their financial plan is not based on their tax status.  

DO YOU HAVE ANY FINAL THOUGHTS TO SHARE WITH OUR VIEWERS WHEN ITCOMES TO TAX PLANNING?

Everyone’s situation is different so as we near the end of the year, I suggest that everyone sit down and review where they are financially, and what steps can be taken before year end to either reduce tax, or increase your chances of success going into tax season next year. 2022 is expected to be a big year for tax changes and getting ahead oft hose changes, and planning proactively will help set you up for success. And of course, I would advise you to consult with a tax professional if you can.

Matt offers investment advisory services through TCG Advisors, an  SEC Registered Investment Advisor under HUB International.  

“Visit TCGServices.com/KXAN for more information.”

This segment is paid for by Trusted Capital Group and is intended as an advertisement. Opinions expressed by the guest(s) on this program are solely those of the guest(s) and are not endorsed by this television station.